Jon Chait on Obama's negotiating predicament:
President Obama has a credibility problem. He has compromised so often that Republicans simply don't believe that he'll sustain his opposition to anything.…Obama clearly faces a perception problem. Republicans may complain that he's walked away from deals, but they really think he's a pushover who will cede more and more ground the harder and longer they push. That's a dangerous position to be in on the verge of a high stakes game of chicken. It encourages the Republicans to push the envelope farther and farther—even to walk away from a deal they regard as a win in search of an even better win.
Unfortunately, Obama is between a rock and a hard place. His basic strategy is simple: to position himself as the endlessly reasonable guy willing to go the extra mile but constantly stymied by a crackpot, hard-line group of nihilists in the Republican Party. For various reasons, some genuine and some opportunistic, he thinks this is the way to play things.
Now, you may or may not like this strategy, but it's the one he's chosen. Unfortunately, it's an extremely fragile strategy. Republicans are already furiously trying to pretend that it's Obama who's being the obstructionist, and they're making headway even though there's virtually no substance to this at all. But if Obama gives them even the least opening by genuinely refusing an arguably fair deal, they'll have all the ammunition they need. Obama will lose his Mr. Reasonable cred overnight, and with it whatever public opinion advantage it gave him. Conversely, though, as Chait points out, if he sticks to his Mr. Reasonable guns at all costs, he looks like a pushover. He's chosen a very, very narrow tightrope to negotiate.